No more tax handouts to rich companies

Trudy Haines

An increasing number of large companies are lining up with their hands out, asking for a tax break from the city.

Some of these companies are rich, extremely rich. For example, Avago is asking for a $4.6 million tax handout, most of which they'll receive next year. Avago doesn't want to pay its city use tax (equivalent to sales tax) when it completes the final phase build-out of its semi-conductor manufacturing operation in Fort Collins. It already received almost $3 million in a tax handout last year. Combined, this is a huge amount of money for the city - 7.5 percent of our entire annual general fund budget.

However, $4.6 million is a drop in the bucket for Avago; it's already invested hundreds of millions in its operation here. It will spend another $165 million in outfitting the last section of the manufacturing facility in town. Plus, last year alone, Avago's revenue was $2.3 billion, and it had an almost unheard of after-tax profit of 24 percent, or $552 million. Avago also happens to have nearly a billion dollars in cash on hand. Yet it's asking for $4.6 million of our tax money. It's a drop in the bucket for Avago, but it is a lot of money to us.

But there's more. Last year, Avago's CEO alone made $16 million in compensation. Yes, $16 million. It looks like the $3 million tax handout from us last year subsidized multi-million-dollar payouts to executives.

Contrast that with the fact that most of the jobs Avago says would be created in Fort Collins are production jobs paying an average of $30,000 per year. These new Avago employees will need services and infrastructure from the city, and these new employees would each have to spend $690,000 in retail sales next year to make up for the taxes Avago wouldn't be paying.

The citizens of Fort Collins just passed an additional tax on themselves to keep Fort Collins great - for the very services that Avago doesn't want to pay for. The city has told seniors and the disabled that there isn't enough money for the full Dial-A-Ride schedule; told families that we can't afford to help with after-school programs; told us that we can't afford to run a functional transit system. Yet we can afford to give a tax break to a company whose cash on hand is 10 times our city's general fund budget?

The bottom line is that a tax break to Avago is unfair to the citizen taxpayers and to all the businesses in town that pay their fair share. Our tax money shouldn't go to subsidize multi-million-dollar bonuses to executives in Singapore and California. Fort Collins has a huge competitive advantage to businesses in the great services, infrastructure and high quality of life that attracts entrepreneurs, businesses and employees. In fact, we are currently rated third out of 200 metro areas in the U.S. as the best place to do business. Our city should not act like we're a distressed suburb of Detroit. We are not.

We wish Avago continued success, but companies such as Avago need to be good corporate citizens, like so many other companies in town that pay their taxes.